J.B. BODA RENSURANCE BROKERS P.LTD, MUMBAI V. ADDL CIT 1(2), MUMBAI

ITA 399/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88563 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Assessee
• Bench Allotted: J
• Next Hearing Date: 23-12-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 17-01-2012
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Keywords: Depreciation

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL J , BENCH MUMBAI , BEFORE SHRI I. P. BANSAL, J M & SHRI R.C.SHARMA , A M ITA NO. 399 / MUM/20 1 2 ( ASSESSMENT YEAR : 200 6 - 0 7 ) J.B.BODA REINSURANCE BROKERS PVT. LTD., MAKER BHAVAN, 1, SIR V.T.MARG, MUMBAI - 400 020 VS. ADCIT 1(2), MUMBAI PAN/GIR NO. : A A BCJ 2372 E ( AP PELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : NONE /REVENUE BY : SHRI AKHILENDRA YADAV DATE OF HEARING : 2 ND MARCH , 201 5 DATE OF PRONOUNCEMENT 4 TH MARCH ,2015 O R D E R PER R.C.SHARMA (A.M) : THE ASSESSEE HAS FILED THIS APPEAL AGAINST THE ORDER OF CIT(A), DATED 1 - 12 - 2011 FOR THE ASSESSMENT YEAR 200 6 - 0 7 , IN THE MATTER OF ORDER PASSED U/S. 250(6) OF THE ACT . 2. THE FIRST GRIEVANCE OF THE ASSESSEE RELATES TO DISALLOWANCE OF 50% CLAIM OF DEPRECIATION. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE 4 . WE HAVE HEARD CONTENTION OF LD. DR AND PERUSED THE RECORD. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD ACQUIRED AN OFFICE IN VADODRA FOR RS.22,54,780/ - . THE AGREEMENT WAS REGISTERED ON 22.11.2005 THEREFORE THE ASSESSING OFFICER HAS ALLOWED DEPRECIATION TO ITA NO. 399 / 1 2 2 THE HALF THE AMOUNT OF NORMAL DEPRECIATION WHEREAS THE ASSESSEE COMPANY HAS CLAIMED THAT IT HAS ACQUIRED THE OFFICE ON 20.05.2005 AND THEREFORE FULL DEPR ECIATION FOR THE WHOLE YEAR MAY BE ALLOWED TO THE ASSESSEE COMPAN Y. THE ASSESSEE COMPANY HAD CLAIMED DEPRECIATION ON VADODRA OFFICE AMOUNTING TO RS.2,25,478/ - BECAUSE IT WAS USED FROM 20.05.2005 AND THE PAYMENT WAS COMPLETED BY 19.05.2005 WHEREAS THE REGIS TRATION OF THIS PROPERTY WAS DONE ONLY ON 20.11.2005 AND THEREFORE THE ASSESSING OFFICER HAS ALLOWED THE DEPRECIATION TO THE. EXTENT OF RS.L,12,739 / - R ESTRICTING IT TO THE HALF YEAR PERIOD. 5 . FROM THE RECORD WE FOUND THAT ALL THE PAYMENTS FOR AFORESAID P ROPERTY WERE MADE BY ASSESSEE BY 20 TH MAY 2005 AS PER THE PURCHASE AGREEMENT PLACED ON RECORD. THE PROPERTY WAS ALSO PUT TO USE FROM 20 TH MAY, 2005 IMMEDIATELY AFTER MAKING FULL PAYMENT. ONLY STAMPING AND REGISTRATION FEES WERE PAID AND SUBSEQUENTLY REGIST RATION FORMALITI ES WERE COMPLETED ON 22 - 11 - 2005, KEEPING IN VIEW THE PROPOSITION OF LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF MYSORE MINERALS LTD. V. CIT (1999) 239 ITR 775 (SC) . MERELY BECAUSE REGISTRATION WAS MADE LATER ON, THE ASSESSEES CLAIM FOR DEPRECIATION CANNOT BE DECLINED WHEN IT WAS PUT TO USE IMMEDIATELY AFTER MAKING FULL PAYMENT ON 20 - 5 - 2005. ACCORDINGLY, WE DIRECT THE AO TO ALLOW ASSESSEES CLAIM OF DEPRECIATION FOR THE ENTIRE YEAR. 6 . THE AO HAS DISALLOWED 10% OF SALES PROMOTION EXP ENSES BY OBSERVING THAT THERE IS A DISPROPORTIONATE RISE IN THE SALES PROMOTION ITA NO. 399 / 1 2 3 EXPENSES AS COMPARED TO THE INCREASE IN CORRESPONDING SALES. FROM THE RECORD WE FOUND THAT ASSESSEE IS MAINTAINING FULL RECORD OF EXPENSES SO INCURRED AND ALSO PAID FRINGE BEN EFIT TAX ON THE ENTIRE AMOUNT OF SALES PROMOTION EXPENSES OF RS. 43,68,151/ - . AS PER THE FOLLOWING JUDICIAL PRONOUNCEMENTS, NO ADHOC DISALLOWANCE IS TO BE MADE WHEN FRINGE BENEFIT TAX HAS BEEN PAID : - I) HANSRAJ MATHURADAS VS. ITO, ITA NO.2397/MUM/2010, VI DE ORDER DATED 16 - 9 - 2011; II) M/S INDUSTRIAL PACKAGING PRODUCTS VS. ACIT, ITA NO.1452/MUM/2010, VIDE ORDER DATED 20 - 4 - 2011; AND III) ACIT VS. M/S MICRO TURNERS, ITA NO.4569/DEL/2011, VIDE ORDER DATED 15 - 2 - 2013. RESPECTFULLY FOLLOWING THE PROPOSITION OF L AW LAID DOWN IN THE ABOVE JUDICIAL PRONOUNCEMENTS, WE DO NOT FIND ANY MERIT IN THE ORDER OF LOWER AUTHORITIES FOR ADHOC DISALLOWANCE OF CLAIM OF SALES PROMOTION EXPENSES. ACCORDINGLY, WE DIRECT THE AO TO DELETE THE SAME. 7 . IN THE RESULT, AP PEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 04/03/ 201 5 . SD/ - SD/ - ( ) ( I. P. BANSAL ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 04/03 /201 5 /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A), MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. ITA NO. 399 / 1 2 4 / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI //TRUE COPY//